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<p class="MsoNormal"><span style="color:#1F497D">I’d be interested in knowing whether you have found any authority that supports the idea that if you split a trust into shares based on the relative values that each of two grantors contributed to the trust,
each of the divided trusts will be treated as if created by only one of the grantors.<o:p></o:p></span></p>
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<p class="MsoNormal" style="line-height:11.25pt"><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:black">CARLYN MCCAFFREY
</span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#1F497D"><br>
</span><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:black">Partner
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<p class="MsoNormal" style="line-height:11.25pt"><b><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:#00A68E">McDermott Will & Emery LLP</span></b><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#1F497D"> </span><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:black">340
Madison Avenue, New York, NY 10173-1922</span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#1F497D"><o:p></o:p></span></p>
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<p class="MsoNormal" style="line-height:11.25pt"><b><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:#00A68E">Tel</span></b><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:black"> +1 212 547 5324 </span><span style="font-size:7.5pt;font-family:"Arial",sans-serif;color:white">
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<p class="MsoNormal" style="line-height:11.25pt"><b><span style="font-size:7.0pt;font-family:"Arial",sans-serif;color:black"><a href="https://www.mwe.com/people/mccaffrey-carlyn-s/"><span style="color:black;text-decoration:none">Biography</span></a> </span></b><b><span style="font-size:7.5pt;font-family:"Arial",sans-serif;color:#00A68E">|</span></b><b><span style="font-size:7.0pt;font-family:"Arial",sans-serif;color:black"> <a href="http://www.mwe.com"><span style="color:black;text-decoration:none">Website</span></a> </span></b><b><span style="font-size:7.5pt;font-family:"Arial",sans-serif;color:#00A68E">|</span></b><b><span style="font-size:7.0pt;font-family:"Arial",sans-serif;color:black"> <a href="https://dynasend.com/signatures/vcard/cmccaffrey-at-mwe.com.vcf"><span style="color:black;text-decoration:none">vCard</span></a> </span></b><b><span style="font-size:7.5pt;font-family:"Arial",sans-serif;color:#00A68E">|</span></b><b><span style="font-size:7.0pt;font-family:"Arial",sans-serif;color:black"> <a href="https://www.twitter.com/McDermottLaw"><span style="color:black;text-decoration:none">Twitter</span></a> </span></b><b><span style="font-size:7.5pt;font-family:"Arial",sans-serif;color:#00A68E">|</span></b><b><span style="font-size:7.0pt;font-family:"Arial",sans-serif;color:black"> <a href="http://www.linkedin.com/company/mcdermott-will-&-emery"><span style="color:black;text-decoration:none">LinkedIn</span></a></span></b><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#1F497D"><o:p></o:p></span></p>
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<p class="MsoNormal" style="line-height:11.25pt"><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:black">Ellen Schwartzman, Assistant to Carlyn McCaffrey<br>
<b>Tel</b> 212-547-5437 </span><span style="font-size:7.5pt;font-family:"Arial",sans-serif;color:white"> |
</span><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:black"> <b>Email</b> <a href="mailto:eschwartzman@mwe.com"><span style="color:black;text-decoration:none">eschwartzman@mwe.com</span></a></span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#1F497D"><o:p></o:p></span></p>
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<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
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<p class="MsoNormal"><b>From:</b> estgift-bounces@actec.org <estgift-bounces@actec.org>
<b>On Behalf Of </b>Day, Eileen<br>
<b>Sent:</b> Wednesday, July 29, 2020 5:51 PM<br>
<b>To:</b> 'EstGift@actec.org' <EstGift@actec.org><br>
<b>Subject:</b> [EstGift] Spouses as Joint Grantors<o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal" style="margin-bottom:12.0pt"><b><span style="font-size:12.0pt;background:deepskyblue">[ External Email ]</span></b><span style="font-size:12.0pt;font-family:"Arial",sans-serif"> </span><span style="font-size:12.0pt;font-family:"Times New Roman",serif"><o:p></o:p></span></p>
<p class="MsoNormal">Question for you all regarding grantor trust status. <o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">We are considering an irrevocable grantor trust where both spouses are grantors by gifts to the trust. Further assets would be sold to the trust by one or both spouses on a promissory note. For a number of years there may be little liquidity
in the trust and payments on the promissory note may be made by return of the asset sold. So long as the trust is a grantor trust, no gain/loss is recognized on the interest or return of the asset sold in payment of the note.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">If one spouse dies, we likely then have a non-grantor trust as to the proportion of the trust represented by the deceased spouse’s contributions, and a grantor trust as to the proportion of the trust represented by the surviving spouse’s
contributions.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">The idea we are considering is whether at the time of the first death we can bifurcate the trust, making a non-pro-rata allocation of assets and debt so that the non-grantor portion receives assets and no debt, equal to 50% of the trust
value and the grantor portion receives the note payable and assets with a net value equal to 50% of the trust value (obviously, more of the assets than the non-grantor portion to offset the debt).<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">If we make this a GST Trust, I believe we can do a qualified severance of the trust and do a non-prorata allocation of assets so long as the values are equivalent.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Any concerns with that approach that you can see?<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Thank you for your thoughts,<o:p></o:p></p>
<p class="MsoNormal">Eileen<o:p></o:p></p>
<p class="imprintuniqueid"><b><span style="font-size:11.0pt;font-family:"Arial",sans-serif;color:black">Eileen M.</span></b> <b><span style="font-size:11.0pt;font-family:"Arial",sans-serif;color:black">Day</span></b><br>
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